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Qualified Small Employer Health Reimbursement Arrangements

What to look for and how to protect yourself

Under the right circumstances, sole proprietors and other small businesses can reimburse employees for legitimate out-of-pocket medical expenses up to the annual limits.

By implementing a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), employers can report these reimbursed medical expenses as a business deduction. If all the formalities are met, the reimbursements are not subject to income tax or payroll taxes.

The annual limits for year 2019 are $5,150 for self-only coverage and $10,450 for family coverage.

A QSEHRA can reimburse qualified medical expenses for the employee or the employee’s family members. These expenses include:

Your business is eligible to set up a QSEHRA if:

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